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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Heritage Financial Corporation (XNAS:HFWA) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
HFWA
Name:
HERITAGE FINANCIAL CORPORATION (XNAS:HFWA)
Sector:
10.20M
Industry:
Banks�Regional
CEO:
Mr. Jeffrey Deuel
Total Employees:
727
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -551.89% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF HERITAGE FINANCIAL CORPORATION(HFWA) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND BANKS�REGIONAL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
26.2
One Month Price Target:
$26.29
Six Month Price Target :
$26.71
Likely Price in One Year's Time:
Ticker:
$27.22
Likely Trading Range Today Under (Normal Volatility)
$26.09
Price Upper limit ($) :
$26.33
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$24.77
This week:
$23.
This month :
$19.8
Other Primary facts
Market Cap:
905.68M
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
35.10M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.48%
-14.18%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$32.85
$29.81
$19.55
$22.59
Medium risk (<10%) entry points
Buy Call
Sell Call
$28.82
Buy Put:
Sell Put:
$28.17
$23.57
$24.23
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
HFWA
Sharpe Ratio:
0.81%
Comparison:
HFWA, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -33.86% lower than the industry
& is -64.36% lower than the market/S&P 500 average
Average Returns/Yield of
HFWA
Daily returns:
0.03%
Weekly returns:
0.15%
Monthly returns:
0.61%
Yearly returns:
10.91%
Comparison of returns:
Average annual returns/yield (last 3 years) is -32.72% below industry average
Classification:
HFWA, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.73
Statistical test of Returns:
HFWA has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.68%
Weekly Volatility:
5.98%
Monthly Volatility:
11.97%
Yearly Volatility:
41.46%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.14%
Volatility in last five trading days has been -94.60% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.47%
Weekly VaR:
-12.22%
Monthly VaR:
-24.44%
How Much Can the price of
HFWA
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-21%
Worst case (decline):
-84.67%
This translates to price declining to:
$20.63
This translates to price declining to:
$4.02
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
HFWA is a 72.50% riskier investment compared to the market/S&P 500 & is 47.78% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -6.32% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
HFWA
Beta in relation to market/S&P 500--0.58
Expected beta in 1 year's time:
0.55
Expected beta in 3 year's time:
0.778
Unlevered (debt free) Beta:
0.568
Beta in relation to Nasdaq (XNAS):
0.559
Beta in relation to all global stocks::
0.796
Beta Comparison & Analysis
Beta of competitors/peers::
1.216
Beta is -52.29% lower than peers
Average Industry Beta:
0.964
Beta is -39.80% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
8.18%
Sustainable growth rate is -10.44% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.002
Alpha is -81.23% below industry average alpha yield
Alpha is 14% compared to market & is healthy
Analysis of Cost of Capital of
HFWA
Equity cost of capital:
0.071
Equity cost of capital is -26.94% below industry mean WACC
Unlevered (without debt) cost of capital:
6.98%
Before-tax cost of debt:
31.71%
After-tax cost of debt:
25.05%
Overall debt rating:
Non-investment grade (junk/speculative grade
Weighted average cost of capital (WACC):
25.05%
WACC is -37.55% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$6.71
Revenue growth rate per share of (3Y):
1.12
Annual revenue growth rate is -65.88% below industry average
EPS:
$2.58
Expected Annual growth rate of EPS (3Y):
14.06%
Expected future EPS growth rate is 16.91% higher than the Banks�Regional industry
Free cash flow (FCF) per share:
$1.89
Balance sheet equity growth per share: 12.32%
Equity growth rate per share is -68.17% lower than the industry
Debt per share
$0.61
EBITDA per share
$3.04
Valuation Analysis Today of
HFWA
P/E Ratio:
11.89
P/E Ratio of Competitors/Peers:
46.1
P/E ratio is -74.21% lower than main peers & is -4.17% lower than the industry
Stock price/value with industry average P/E ratio: $32.01
HFWA is -18.16% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $51.00
Present value of the expected future dividends only: $13.76
P/S (Price to Sales ratio):
3.91
Price to sales ratio is -8.64% below the industry mean
P/B (Price to book value ratio):
1.12
Price to free cash flow: 13.86
-
Net income growth rate (3Y):
84.98%
Net income growth rate is 54.31% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 7.97%
Dividend yeild: 3.17%
Previous Dividend: $0.21
Previous adjusted dividend: $0.21
Previous Dividend: $0.83
Expected next dividend best case: $0.22
Expected next dividend worst case: $0.20
Average dividend payment (long-term): $0.20
Average dividend increase/decrease (growth rate) % per period: 1.03%
Expected next dividend payment date: 16/08/2022
Expected next dividend record date: 08/02/2022
Expected next dividend declaration date: 19/07/2022
Previous dividend payment date: 18/05/2022
Previous dividend record date: 05/04/2022
Previous dividend declaration date: 20/04/2022
Dividend History:
2022-05-03--$0.21
2021-11-02--$0.21
2021-05-04--$0.20
2022-02-08--$0.21
2021-08-03--$0.20
2021-02-09--$0.20
Dividend growth rate is -95.63% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
2.59%
Net debt to equity ratio:
-189.36%
Debt to assets ratio:
0.28%
Net debt to assets ratio:
-20.78%
Debt-to-asset ratio is -99.83% below industry average
Ability to repay debt:
Interest coverage ratio:
15.82
Interest coverage ratio is 1809.31% more than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.547
Statistical significance of correlation:
HFWA has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.501
Stock price is 9.24% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.501
Correlation of price movement with Nasdaq (^IXIC):
0.032
Covariance of price movement with the market:
0.05
Kurtosis
5.436
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.441
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
HFWA
Gross Profit Margin Ratio:
100%
Operating Profit Margin Ratio:
0.00%
-
Net Profit Margin Ratio:
100%
Effective Tax Rate:
18.48%
Effective tax rate is -14.25% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
11.25%
Return on equity (ROE) is -5.66% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.24%
Return on assets (ROA) is -46.40% lower than the industry
Financial Leverage:
1.0x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
-
Stock based compensation to net income ratio:
1.03%
In-depth Efficiency Analysis
Revenue generated per employee:
323.8K
Each employee generates -15% less revenue than industry average revenue per employee
EBITDA generated per employee:
146.7K
Each employee generates -35% less EBITDA than industry average revenue per employee
Profit generated per employee:
127.2K
Each employee generates -10% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
14.0K
Each employee generates -83% less free cash flow than industry average revenue per employee
Assets/Capital per employee
2.5M
Each employee generates -83% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
HFWA
Univest Financial Corporation (XNAS:UVSP)
QCR HOLDINGS, INC. (XNAS:QCRH)
MAACU
WISDOMTREE INVESTMENTS, INC. (XNAS:WETF)
PEOPLES BANCORP INC. (XNAS:PEBO)
HORIZON BANCORP, INC. (XNAS:HBNC)
BMTC GROUP INC. (XTSE:GBT)
GOHEALTH, INC. (XNAS:GOCO)
ALLEGIANCE BANCSHARES, INC. (XNAS:ABTX)
Current Analyst Ratings
Strong buy�4%
Buy�4%
Hold�17%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
235.40M
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
57.75M
-
107.57M
110.21M
2.64M
- 26141.00K
3.04M
207.23M
6.74M
- 13497.00K
106.64M
-
92.45M
113.40M
20.95M
92.45M
Statement of Cash Flow
Date:
Period:
- 868.00K
Differed Income Tax :
-
Stock Based Compensation :
950.00K
Change in Working Capital :
-
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
- 8911.00K
Net Cash Provided by Operating Activities:
10.93M
Investments in PP&E:
- 724.00K
Net Acquisitions:
-
Purchases of Investments:
- 290258.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.58B
1.04B
2.62B
14.58M
-
-
-
78.74M
240.94M
9.27M
1.46B
-
-
1.79B
9.27B
7.48B
-
-
-
-
-
-
21.25M
-
21.25M
6.68B
6.66B
550.10M
305.58M
- 34228.0K
-
March 31, 2022 at 6:00:00 AM
-
821.45M
7.48B
2.50B
21.25M
- 1555469.0K
42.33M
5.74M
- 242914.00K
-
-
- 2652.00K
- 7372.00K
95.44M
85.42M
-
- 146570.00K
1.58B
1.72B
10.93M
- 724.00K
10.20M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
HFWA
2023
2024
2025
2026
2027
$27.36
$62.00
$64.42
$66.93
$69.54